What should be done about UFC Fighter Pay?

fighter pay

 

UFC fighter pay is not a new issue. This isn’t the first time that social media, MMA media, and former MMA fighters have argued that fighters are not paid their worth. Following the publication of the UFC 270 purse (totaling $1.8 million) by the California State Athletic Commission (CSAC), the debate has once again dominated the past couple of weeks of MMA discourse.

This time it feels different. This time, the baddest man on the planet and the UFC Heavyweight champion Francis Ngannou is locked in a bitter dispute with the UFC about fighter pay and contractual control. Never has such a high-profile active fighter, let alone a champion, been so outspoken with such candor about his compensation or lack thereof. This comes off the back of a record year for the UFC, which is estimated to have generated approximately $930 million in revenues. Understandably, the fans are not happy.

In an interview with Ariel Helwani, Ngannou stated that one of his issues is the restrictive nature of UFC contracts. UFC fighters are not employees but rather independent contractors. According to Ngannou, UFC contracts blur the lines between employee and contractor. The contract should either confer employee benefits and protections or the freedom of a contractor. Ngannou argues his contract offers neither.

Whilst I have a law degree, I won’t pretend to be a US labor law expert. However, the issue of employee vs. contractor status is a well-tested area of law. Despite this, it is unlikely any UFC fighter (save a few superstars) have the financial means to test their rights under a UFC contract in a court of law. If Francis wants to pursue a career in boxing, he will likely have to leave the UFC to accomplish it. Unless he is able to convince the UFC that such a spectacle would draw Mayweather/McGregor type numbers.

Bad Faith Arguments

Let me be clear. The majority of UFC fighters are underpaid. However, many of the arguments thrown out by MMA media and fans simply don’t make sense. Pointing out the flaws in these arguments does not mean siding with the UFC or big business over the fighter. If we want conditions to improve for fighters, conversations around their pay must be grounded in reality.

“Other sports share revenue equally”

One of the primary arguments being made in favor of increased fighter pay is that the UFC only pays fighters an estimated 16-20% of its revenue. On the other hand, major league sports give their players a much larger share of the pie.  The UFC is not like the NFL, the NBA, or any other professional sports league that has a player’s union. The only reason these sports have been able to achieve a near-even revenue split between players and ownership is through collective bargaining. Right now, Major League Baseball and the players union are in a lockout amidst negotiations.

In the absence of a fighter’s union, there is no ability for the labor force to pressure the UFC to an extent that would affect their ability to offer a world-class product. Major league sports have been in existence for far longer than the UFC, which has allowed their working conditions to evolve over time.

Take the NFL for example. It has been in existence since 1920, but players did not get true free agency until 1993. As a response to free agency, the NFL introduced a salary cap. This is calculated each year based on projected revenue and the percentage of revenue allocated to players under the CBA (48% for the next decade). Interestingly, the league’s biggest stars were against the new CBA, whilst two-thirds of the players who are on minimum contracts (between $660,000 and $1.07 million per year depending on years of service) were in favor of the proposals.

Whilst there are clear benefits to being part of a major league players union, it also comes with obligations and responsibilities, as well as a forfeiture of certain rights. For example, players can be traded between teams with no notice during the trade window. Is your family happy and settled in Florida? Too bad, you play for Seattle now. Even worse, you could be traded to a Canadian franchise.

It isn’t just in-season where players are restricted either. NFL players are not permitted to engage in any activity outside of football that may involve a significant personal injury risk. That doesn’t just mean base jumping or running with the bulls either. Ja’Wuan James lost $15 million in guaranteed money when the Broncos voided his contract after he injured his Achilles whilst training at home instead of the team facility.

In addition to this, player salaries are paid weekly, and for many are non-guaranteed. That means if they get hurt, or don’t perform, they can be cut from the team without earning close to the total value of their contract. That’s why commentary like this is asinine:

Finally, the UFC is a business owned by a publicly-traded company. They have legal and fiduciary obligations to their shareholders. Suddenly deciding to pay independent contractors up to 50% of the revenue, instead of reinvesting these funds into the growth of the company or distributing them as a dividend is likely to disgruntle some of the major shareholders. Any model that reduces the profits available to the UFC/Endeavor likely needs to be beneficial for the UFC too.

The UFC has grown rapidly over the past decade. This growth has far outpaced the evolution of the working conditions for the fighters. It is time to redress the balance of power between the UFC and the fighters. But, pointing to the NFL or other major league sports and hoping their model will be adopted is naïve.

 

“Bellator and the PFL pay their fighters well”

Rival promotion Bellator is purported to pay its fighters 50% of its revenue. But don’t get it twisted, Scott Coker is not running a humanitarian organization. Many of their preliminary bouts feature fighters on a Single Bout Contract. This pays fighters $1,750 to show and another $1,500 if they win. At Bellator 266, a total of 10 fighters took home $6,000 or less. Their smaller revenues are not an excuse either. Bellator is owned by ViacomCBS, which generated over $25 billion per year in annual revenues from 2018 – 2021.

One advantage that fighters have in Bellator is the ability to earn income from sponsors on their fight clothing. The UFC prohibited their fighters from doing this with the unpopular Reebok deal. However, this is entirely down to the fighter to source and generate this income. Bellator merely provides the platform.

The PFL is growing rapidly in popularity and offers a tournament-style format for its fighters. Their differentiating factor is the $1 million prize on offer each season for the champions. However, only one fighter will secure the bag in each weight division. Fighters typically earn $25k to show and $25k if they win. Not only that, the PFL is reliant on regular investment and has yet to start generating regular profits. They have a long-term plan, and they may be profitable in time but there are no guarantees they are running a sustainable business.

Both Bellator and the PFL have pros and cons in how they compensate their athletes, but I would argue that neither is doing a perfect job.

 “Boxers make millions of dollars. Why can’t UFC fighters?”

First and foremost, boxing superstars make plenty of money – and rightly so. However, outside of the biggest stars, boxers are not earning vast sums of cash either. Let’s take the widely cited trilogy bout between Tyson Fury and Deontay Wilder as an example.

The actual purse for both fighters was $5 million (approximately eight times Ngannou’s purse). The rest of their money came from PPV sales (600,000 in the US and 300,000 overseas). Both fighters earned large sums of money which dwarfed the earnings of the other fighters on the card. Former IBF heavyweight champion Charles Martin earned $275,000, and the average payout of all undercard fighters was just $24,000. The lowest payout was $4,000 paid to Vito Mielnicki Jr. The gate was approximately $10 million.

We can also be certain that Francis Ngannou and Cyril Gane made more than their disclosed purses. Whilst the PPV numbers for UFC 270 have not yet been disclosed, UFC 269 sold approximately 500,000 units. UFC 270 domestic sales are expected to exceed this rate, but let’s use the same figure for a conservative estimate. Using information from a report by Hal Singer, both Ngannou and Gane as champions could expect to earn another $600,000 each in PPV revenue. If the event sold 700,000 units that amount could grow to over $1 million, each. The gate for this event was $5 million. It’s also worth noting here that fighters receive PPV money for overseas sales where the price charged is at least equivalent to $40 USD.

Of course, Ngannou (and Gane) should still be earning more than $1.2 million for a world title fight. But, contrasting their earnings with boxing, which is far more mainstream, and has been established for many more years is not a like-for-like comparison. It is also worth noting here that Ngannou has turned down multiple improved contracts offers to avoid resetting the five-year sunset clause in his contract. He has left an estimated $7 million on the table in a bid to reach free agency. Were he not so determined to see out his contract, his guaranteed purse for this fighter would have been significantly higher.

What is the Solution?

Whilst simply saying “pay the fighters more” sounds nice, it doesn’t get anything done. A proper solution needs to be put forward. Telling fighters to unionize is also a pipedream at this stage. The fighters who could afford to hold out are not likely to be concerned about other fighters on the roster. Even if they genuinely care, I doubt they will be putting their hands in their own pockets to help fund a holdout. One of the reasons why it is unlikely we will ever see a fighter’s union is that many fighters are in debt until they earn their next fight check. It’s a vicious cycle of dependency on the UFC that is unlikely to be broken any time soon.

In the absence of a union, the UFC will never offer anything close to a 50% revenue share. However, they may be more amenable to a model that is proposed by high-profile fighters that benefits both parties. The proposal set out below details changes both inside and outside the Octagon that the UFC could implement. The model is not perfect however it could be a springboard for more significant change in time.

Outside the Octagon

  1. The UFC will pay a stipend to all its rostered fighters of $50,000 per year (approximately the median salary of the US in 2021). To be eligible, fighters must have been signed with the UFC for at least 365 days. The UFC will assess the roster twice a year and make payments accordingly. If a fighter has received the stipend in the past 365 days, they are not permitted to receive a second payment. This stipend will have no effect on fight pay, win bonuses, performance bonuses, sponsorship earnings, or PPV earnings. With a current roster of approximately 700 fighters, this would cost $35 million per year for the UFC. This initiative would most benefit the fighters who are not yet established names and are unranked in their weight division. By providing the fighters with a living wage in addition to their fight purses, every fighter on the roster would be able to train full time. This would enhance the quality of fighters pushing for a place in the top 15 of their division. This will improve the quality of the UFC product overall.

 

  1. The UFC will reduce the length of its “sunset clause” in fighter contracts from five years to three years. This will allow fighters to test free agency with more regularity. In turn, it should allow fighters to negotiate a higher compensation rate with the UFC or another organization. It also allows the UFC to move on from fighters who have underperformed their contract value with greater ease.

 

  1. The UFC will provide complete healthcare for injuries sustained, and complications stemming from injuries suffered inside the Octagon, or in training. If a fighter is required to undergo surgery, they can choose to complete their rehabilitation at the UFC Performance Institute. The UFC will make their fighter hotel available to all fighters rehabbing at the Performance Institute.

 

  1. The UFC will seed an investment fund with $100 million. The fund will be administered by an independent manager. Each year, the UFC will contribute the greater of $10 million or 1% of its annual revenue to the fund. All fighters who are under contract with the UFC from the year 2023 will be entitled to invest in this fund in perpetuity. Fighters are able to withdraw their investment at any point in time.

 

  1. The UFC will offer financial education to all fighters under contract. The UFC will offer this at the annual fighter summit. Alternatively, fighters can enroll in a financial literacy course in their own country, to be reimbursed by the UFC.

Inside the Octagon

  1. The minimum fight salary for a fighter who has been signed with the UFC for at least 365 days is $50,000 to show. Win bonuses can be negotiated on a fighter-by-fighter basis.

 

  1. The minimum fight salary for a fighter who has been signed with the UFC for less than 365 days is $20,000 to show. Win bonuses can be negotiated on a fighter-by-fighter basis. These fighters can only be featured on the preliminary fight card. If a reshuffle of the bout order promotes one of these fighters to the main card, the UFC will pay the additional $10,000 for non-PPV events. For PPV events, the fighter promoted to the main card will share in the PPV revenue as set out below.

 

  1. The contract offered to a fighter through the Dana White Contender series will be for three fights or one year (whichever is shorter). It will have a minimum guaranteed value of $60,000. At the conclusion of this contract, the UFC will have the option to retain the fighter for an additional three years. Under this three-year option, the fighter will be entitled to an annual stipend of $50,000. Their minimum salary shall be $50,000 per fight. Win bonuses can be negotiated on a fighter-by-fighter basis. If the UFC does not wish to retain the fighter, they are free to sign with another organization.

 

  1. The UFC will increase performance bonuses from $50,000 to $75,000 for all fight cards. There are typically four bonuses awarded on each card, which would increase the standard bonus pool from $200,000 to $300,000. The PPV performance bonus pool should be greater than $500,000 or 10% of the total gate revenue. A minimum of four bonuses will be awarded from this pool.

 

  1. If a fighter misses their contracted weight by 2% or less, they will forfeit 20% of their total purse to their opponent. If they miss weight by more than 2%, they will forfeit 50% of the total purse of their opponent. Fighters who do not meet their contracted weight will still be eligible for a performance bonus, however, the corresponding percentage of this payment will also be forfeited to their opponent. Any money earned from PPV sales is not forfeit in the event of missing weight.

 

  1. The UFC will improve its PPV Bonus structure. The current PPV bonus structure that typically applies to Champions and other “superstars” is as follows:

One dollar ($1.00) for each pay-per-view buy between 200,000 buys and 400,000 buys; and Two dollars ($2.00) for each pay-per-view buy between 400,000 buys and 600,000 buys; and Two dollars and Fifty Cents ($2.50) for each pay-per- view buy over 600,000 buys.

Since being acquired by Endeavor, the UFC has raised the price of PPV events twice. The portion of revenue shared with the fighters who earn PPV bonus money should be increased:

Two dollars ($2.00) for each pay-per-view buy between 200,000 buys and 400,000 buys; and Three dollars ($3.00) for each pay-per-view buy between 400,000 buys and 600,000 buys; Three dollars and Fifty Cents ($3.50) for each pay-per-view buy between 600,000 buys and 750,000; and Four dollars ($4.00) for each pay-per- view buy over 750,000 buys.

  1. The UFC will award PPV money to all fighters who fight on the main card. Fighters who are not entitled to PPV bonus money based on the above structure are entitled to a portion of PPV revenue. This revenue will be accumulated based on the existing PPV bonus structure and distributed evenly amongst the fighters. The newly proposed PPV structure at Item 6 will remain exclusively for the fighters who have a contractual right to PPV points. For example, where a PPV event sells 500,000 units, a total of $600,000 will be distributed to the fighters on the main card who are not entitled to PPV bonus money in their contract.

Fighters subject themselves to lasting damage and risk their long-term health when they step inside the Octagon. It is only fair that they are well compensated for the revenue they generate. I believe the proposals set out above would go a long way to improving the working conditions for fighters and improve the quality of the sport. The proposals above are primarily targeted at improving the conditions for the majority rather than the top 5-10% of fighters. Improving these conditions means fighters are more likely to collectively negotiate their rights in the future.

However, increasing the PPV revenue and allowing stars to renegotiate a contract every three years will go a long way to seeing fighters like Ngannou realize their true value. This provides the fighter with greater freedom, whilst still requiring the fighter to help drive the promotion of the event to maximize unit sales.

What do you think about the current state of fighter pay? Does my model do enough to redress the imbalance of power between the fighter and the UFC? Or should it go even further? Let me know in the comments or on Twitter @PunchDrunkPod_.

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